Big threat to banking jobs in South Africa

Citigroup published its AI in Finance: Bot, Bank, and Beyond report, revealing that 54% of jobs in the banking sector are at high risk of automation through Artificial Intelligence (AI).

World Wide Worx CEO Arthur Goldstuck says this should not be surprising to the banking group.

“The biggest surprise is that they are surprised by these kind of numbers,” Goldstuck said in an interview with Newzroom Afrika.

“The impact of the Internet on jobs in the banking sector has been far greater over the last decade or with the advent of online banking and then app banking.”

However, Goldstuck notes that the real threat to jobs surrounds software development in the banking space.

This is due to the expected demand for software development and AI development skills in the banking space to enable automation in banking operations.

“The big demand of the coming years is going to be in software development, AI development, and app development,” said Goldstuck.

“You can’t move someone who’s only trained to be a call centre agent or a teller into suddenly developing software.”

“They have to come up with new kinds of jobs, or they have to reskill in different ways to adapt those peoples’ roles,” he added.

Referring to the growth of demand for software developers, Goldstuck highlighted the rapid increase in employment in the software development segment in the US.

He explained that 20 years ago, app development didn’t exist.

“Today in the United States alone, more than two million people are employed in that segment. We’re going to see that in AI as well,” said Goldstuck.

In its report, Citigroup said the incorporation of AI-powered agents, bots, and other systems will significantly change market share, employment, and client experience.

“In the medium term, by 2030 or before, AI-powered bots will play an increasing role in banking and finance. This will challenge many existing ways of doing business,” it said.

Citing Accenture, Citigroup said nearly two-thirds of all work done in banking and insurance has a high potential for implementing AI-driven automation or augmentation.

It noted that at 54%, the risk is far greater than the overall economy average of 40%.

“According to the World Economic Forum, nearly a quarter of all jobs globally will change in the next five years,” it added.

However, there is hope for those employed in the banking sector.

“Historical technology adoption has not led to a reduction of the finance workforce but has changed the workforce mix over time. New jobs are constantly created,” says Citigroup.

“For example, the US economy has 3x more compliance officers from 2000 to 2023.”

Citigroup said implementing AI in banking operations could add $170 billion (R3 trillion), or 9%, to the global banking sector’s profit pool by 2028.

Citing a recent Citi Treasury and Trade Solutions Client Survey, Citigroup says 93% of respondents said AI adoption in banking could improve profitability over the next five years.

“AI could drive productivity gains for banks by automating routine tasks, streamlining operations, and freeing up employees to focus on higher value activities,” it said.

“Generative AI will likely have a big impact on internal facing tasks such as content and information management, coding, and software.”

Regarding client experience in banking, Citigroup believes clients will benefit from automated decision-making and banks’ enhanced operational efficiency.

However, Goldstuck said it would never replace the human touch that many banking clients will still require.